“We are increasingly optimistic that the more price promotional stance that JC Penney is now assuming will allow the chain to make the most of a challenging holiday selling season and position it well to re-accelerate its aggressive turnaround strategy in 2013,” the note said.

Analysts Brian Nagel, Rupesh Parikh and Erica Eiler spent the weekend visiting Penney stores in the New York and New Jersey area.

They found store traffic remained consistent with other December visits and significantly better that in prior months.

Markdowns were more aggressive. Clearance inventory was selling better, and some racks were cleared out. Inventory was light in home, which could represent lost sales; inventory has been moved out to make way for new brands coming in the early 2013.

“A move back to more aggressive price promotions represents a clear deviation from the strict EDLP (every day low price) strategy initially outlined by CEO Ron Johnson. That said, we think a hybrid promotional effort will improve cash generation and serve as a more steady traffic driver for JCP,” the note said.

Johnson has been modifying pricing and marketing with more signs reflecting price cuts on merchandise throughout the store in addition to items that have been moved to the clearance racks.

Likewise, Penney stores in the Dallas area were busier than in past months too. Already, reduced-price holiday decor, including Christopher Radko ornaments at 50 percent off, were going fast. Toys, too, were clearing out, including Fisher Price and Melissa and Doug brands.

The coat area was considerably thinned out and floor space reduced from two weeks ago. Even Godiva chocolates were almost gone.

The big question: Will there be enough measured improvement in sales to calm investors, keep the board happy and give Johnson’s team time to work out their transformation?

Former Penney CEO Myron “Mike” Ullman used to say that Penney stores always did well during what he called “appointment shopping.” He used the term to describe shoppers’ habits of returning to the mall en masse for key periods such as back-to-school, Mother’s Day and of course, Christmas.